Thursday, March 29, 2012

BIG’s Blog: When Something is Better…Its Better, Period

According to new information from the Center For Media Research, Tablets such as the iPad are attracting magazine readers. And of the number that say they are particularly interested in reading digital magazines, males lead females 77% to 68%. Among male Tablet owners age 18 to 34 who expressed interest in reading magazines on their devices, the number rose to 85%.

But the real nugget from the research that surprised even the researchers was the new reading behavior that was emerging. “19% of Tablet owners (equally divided between male and female) who read a magazine on their device in the last 30 days also took the opportunity to read back issues of a title during their reading session.

So what is the takeaway for fundraisers?

First, it is a myth that all digital readers will avoid reading long-form articles or information. In fact, it is men who tend to engage in online reading of long-form articles more than women, and the number grows for younger males.

Second, by making the content compelling and attractive for Tablet devices, not only can fundraisers engage both sexes so they can learn more about your mission and organization, but if their interest is peaked, they will drill in.

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Tuesday, March 27, 2012

BIG’s Blog: More Lessons from Billy Beane for Fundraisers

I promise this will be my last blog reference to Moneyball. Well, at least for this week.

What can fundraising leaders who desperately need to transform from dependence on declining direct mail learn from Billy Beane, general manager of the Oakland A’s and the subject of Moneyball, the bestselling book and recent Oscar-winning movie?

Of course the story for Billy Beane and the Oakland A’s was their use of data and analytics to meet their goals. For fundraisers, while not minimizing the use of analytics in their fundraising efforts, the bigger goal is to figure out how to shift an organization that has practiced fundraising the same way for decades, to one that can develop a growing and sustainable fundraising plan.

Billy Beane offers five lessons.

1. You don’t have to be good at math.

For Billy Beane, using analytics was out of his level of experience. In fact, in talking about his experience, Beane has famously said, “I suck at math.” He was fortunate to have Paul DePodesta with a Harvard degree in economics as his assistant GM. But “math” for Development leadership translates into “strategic planning.” Development leadership can bring in outside help for  the process of developing a new strategic plan, but just like the A’s would not have adopted their winning approach without Beane to champion the idea, so too, developing a new strategic plan for Development will not happen without Development leadership as the champion.

2. It’s not the size of your budget that matters.

Baseball is not fair. It’s a zero-sum game. Only one team can win the World Series. And some teams have a lot more money to spend to get there. The Oakland A’s have one of the lowest payrolls in baseball. They simply can’t afford high-priced talent. But that doesn’t mean they can’t compete.

We have, as clients, some of the largest fundraising groups in faith-based fundraising and some of the smallest and many in between. The fundraising groups with the most to lose are the largest today. If they continue to practice the same old declining methods of fundraising (read direct mail), they will not be the largest in ten years and in fact, they may be gone.

Charity Water didn’t exist in 2003. Today they raise well over $10 million a year and they don’t mail out a single piece of mail.

Small and mid-sized faith-based fundraising groups should be all over developing a new strategic plan built on the Internet!

3. Get everyone on board with your strategy.

At first Beane had a hard time getting buy-in for his new strategy. Many of his scouts refused to believe that mere math could outperform years of experience and intuition. And many of his players (and managers) questioned the tactical implications of decision-making based upon data and analytics.

For long-tenured direct mail fundraisers it is hard to believe that an organization like Charity Water, started in 2004, can already be generating more revenue back to their mission than their organization which has been raising funds for 50+ years. Shifting the focus and budget from direct mail to using the Internet as the base platform for fundraising is an easier sell today since direct mail margins continue to erode. But it still requires a thoughtful process of strategic planning to gain buy-in.

4. Over time, math wins out.

At first it didn’t seem as if Beane’s strategy would be successful. After shedding some high-profile players and bringing on relative unknowns who could “just get on base,” Beane’s club didn’t start off on a winning note. He stuck with it though, and sure enough, the percentages started playing out and the A’s went on to win an American League record 20 games in a row.

After you develop your new Internet-based strategy and begin to execute your new fundraising plan, you will be tempted to over-correct if your initial strategy doesn’t immediately deliver the intended results. Stick with it. One sure motivator will be watching your direct mail profits continue to decline. Direct mail lists and margins are declining while everyday millions of new potential donors get on the Internet for the first time.

5. Evolve or die.

Baseball is full of followers and there is big money involved. After seeing Beane’s strategy successfully play out, many teams adopted the model and brought quant jocks into the front office. The Yankees now have more than 20 full-time data analysts. So now Billy Beane has to find other Key Performance Indicators (KPIs) that can beat their initial KPI of On Base Percentage.

The first hurdle is developing a new strategic plan and implementing it. But then you wake up one day and all other fundraisers are following your lead. Don’t worry. You and Billy Beane have that in common. You can both compete after you have adopted a new winning strategy.

But Billy Beane is ahead of you. His organization has already adopted a new winning strategy.

When is your fundraising organization going to adopt its new strategy?

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A shout out to Penry Price and Aaron Goldman for their contribution and ideas for these past two blogs.

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Sunday, March 25, 2012

BIG’s Blog: Have You Seen Moneyball?

I played baseball as a kid. Full disclosure: I stunk at it. They put me in the outfield and when the batter hit a pop-fly to me, I could never gauge where to be to catch the ball. I’d run in and the ball would sail over my head, or I would run back towards the wall and the ball would drop fifty feet in front of me. And batting? Let’s just say I stunk and leave it at that. That is probably why I appreciate good baseball and good baseball players. And the older I get, the more I enjoy watching the game.

I read Moneyball by Michael Lewis when it first was published in 2003. When I heard they were making a movie of the book, I couldn’t wait to see it. The movie didn’t disappoint.

I’ve already blogged about the analytic theme of the movie. Today I’m going to focus on the message of “why change.” In the case of the movie, they used analytics to recruit players versus the “old ways” of doing so. The same reticence to change rings true for the current state of fundraising.  

The scene that really drove that home for me was the scene where Billy Bean (Brad Pitt), General Manager for the Oakland A’s is talking to Paul Podesta (Jonah Hill), his newly hired assistant GM, about using analytics to draft players for his team.

BILLY: Why… You’re not the only computer science major who likes baseball. If what you and Bill James are saying is right…

PAUL: It’s right.

BILLY: It sounds right.

PAUL: It is right.

BILLY: If math isn’t a theory…

PAUL: It isn’t.

BILLY: If this is right, why isn’t everybody doing it? In fact why isn’t anyone doing it?

PAUL: Because it’s not what they were taught.

Fundraisers today are challenged more than ever to find new donors. The old ways of finding new donors through direct mail is growing as outmoded as thinking that a team shouldn’t draft a player because his girlfriend is ugly (it’s in the movie). But it is the way we have all been taught. It’s also safe and comfortable. But in fundraising, the old modes aren’t working anymore.  

Stop just thinking of your job as a fundraiser for a moment. Our behaviors in our non-work life have changed dramatically as we have become more comfortable with the real-time, always-on Internet. Shouldn’t we adjust to our new behaviors in the way we structure our fundraising?


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Thursday, March 22, 2012

BIG’s Blog: Mass Markets Are Fiction

If I am a buyer of advertising and you own any media outlet (TV, radio, newspaper or direct mail production) and I come to you to reach potential donors, how many prospects do I want to reach? The answer is all of them, if they care about my mission.

But the truth is that whatever “mass” media I choose, I can only reach a vague demographic segment like “the retired” or “women of childbearing age.” Even with direct mail marketing, choosing lists of people that have actually donated to similar causes makes us think we are “targeting” our appeal when 99% never respond.  

Real markets are much more precise. Finding out where a prospect hangs out and what they care about by actually talking to them directly is central to actually understanding their passions and building that into your fundraising business model.

Of course there are metrics that either make a mass media form economically viable or not, but either way you still pay “big bucks” even to test.

Are there costs to marketing on the Internet using social platforms? Of course, but relatively speaking they are extremely low compared to buying media. But here is the differentiator; for nonprofits using social media, the social object that unites people is a shared value or purpose. You find people. People find you. On the always-on Internet this happens in real-time.

Relationships can be forged in real-time with people who actually care about your cause or mission. The relationship is conversational . . . not transactional.

Sears missed most of its performance numbers in 2011 by believing that their only interaction with their customers happened at the cash register.

Many nonprofit fundraising groups missed their 2011 fundraising goals by believing that their only interaction with their donors was the donor sending a check.

It’s not about the mass; it’s about reaching the ones that are passionate about your mission and having a conversation with them.


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Tuesday, March 20, 2012

BIG’s Blog: I Heard It Again

Happy first day of spring. Spring brings renewal and the beginning of growth after winter.

At a recent gathering of fundraisers, I heard again the statement that keeps popping up every year: “The end-product of all fundraising is end-of-life bequests.”


But if I am the president of the nonprofit organization, how do I build a budget around bequests? There are many organizations that make a science out of building projection models for estimating bequest dollars year over year. Some are seemingly very good at it, assuming they don’t need exactly the projected amount, because one of these years is going to be an outlier. If the outlier is on the high side it is not a problem, but if it is on the low side, well, that’s a problem. That’s just the way statistics and probability work with projection models.

Obviously, the better way to build a budget is on annual dollars with bequests as icing on the cake.

But if the vast majority of your annual dollars comes from direct mail and you believe that growing your donor base with direct mail is crucial to keep bequests up . . . you have a looming problem.

As direct mail peaks either in total mail volume or the more important metric of net dollars generated begins to decline, your prime driver for building your base of potential bequests also declines.

The short-term signal of revenue decline from direct mail will foreshadow the coming decline in bequests several years later.

The truth is that this cycle has already started in many direct mail dominant fundraising organizations . . . which is why we talk about developing a new fundraising strategy model not built on direct mail.

Today very small and very large fundraising groups have already started down a road that moves them away from direct mail dependence.

Remember, with spring comes renewal and the journey can begin by just taking the first step.


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Sunday, March 18, 2012

BIG’s Blog: Going Digital

There are a lot of people with opinions – including me – but the people I listen to most carefully are those who are actually responsible for deciding where to spend marketing dollars and are ultimately accountable for the results of those spending decisions. That includes a lot of you fundraisers as well.

A person who also carries that joint responsibility is Marc Pritchard, the head of marketing for Procter & Gamble. All P&G brands have to grow every year, but Marc Pritchard views his number one job as figuring out how to spend less marketing dollars while still delivering more revenue.

Mr. Pritchard thinks the way to do that for P&G is to spend more efficiently, leaning more heavily on lower-cost digital marketing, and easing up somewhat on pricy broadcast ads. His goal is to cut $1 billion from the P&G marketing budget primarily by moving to lower-cost digital. P&G’s 2011 advertising spend was $9.3 billion.

But just because they are the mighty Procter & Gamble doesn’t mean they knew digital anymore than your organization when they first encountered it. Pritchard, who became chief of global marketing in 2008, explained to the Wall Street Journal’s Emily Glazer how he approached building a staff to support digital.

“I took a small group of people when I first got there to learn everything we could about digital and get that through the company. Search was the first thing; we mastered it … The same thing with digital banner ads and now social media …”

What can nonprofit fundraisers learn from Marc Pritchard at P&G?

First, before you move, put together a plan. Understanding that digital is important is one thing, but committing in public to cut your budget by $1 billion based on digital savings isn’t something a senior marketing executive of a public company does without knowing he can get there . . . and his financial plan is backing up his statement.

Second, understanding that digital is important means nothing if you have no competent expertise in-house. Start with a small, dedicated team and build from there.

Third, develop competence in digital by mastering one digital area at a time. For fundraisers this might mean engaging a digital agency for a period of time while your in-house team builds experience.


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Thursday, March 15, 2012

BIG’s Blog: Era of Winners and Losers in Fundraising?

Most of my blog readers are fundraisers who depend heavily on direct mail for a significant percentage of their annual dollars . . . and of course most of my readers know that I have been involved in direct marketing for over 30 years. Being good direct marketers means we are very attuned to “the numbers,” and being attuned to numbers means that as a group we understand more quickly than most the implications of studies that use hard numbers.

Last week I attended the NCDC Summit conference in Louisville, KY, along with a sizable contingent of Development leadership of NCDC member organizations as well as the leadership of corporate members like myself.

The lead speaker was Susan Raymond, Ph.D., from Changing Our World, Inc. Mrs. Raymond has her Ph.D. from John Hopkins in Advanced International Studies with a focus on economics. Over the next few weeks and months I will be referring to some of the key data points she shared with the group and the implications for all of us in nonprofit fundraising.

From 1982 until 2008, the number of charities incorporated increased 232% while the real value of adjusted giving dollars increased by only 133%.

The implication: too many charities chasing too few dollars. This will only produce one outcome and that is one of “Winners and Losers.” The winners are going to alter and change how they raise dollars by becoming more effective and productive, which will begin to take care of the “too many” charities. Those that change will have a chance to survive. Those that don’t change…

The good news for you and other existing fundraising organizations that already have supporters who love you is that you have a leg up on all those new charities that are just starting out. But the newbies don’t have your legacy direct mail programs and will not use direct mail to build their fundraising base as it is too expensive. What will they use? The Internet, where there are already millions of people online and the costs are lower. Don’t let these fundraising newbies beat you to the donors that are online!

And you thought all this draconian, Darwinian, “survival of the fittest” stuff just applied to the commercial sector.


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Tuesday, March 13, 2012

BIG’s Blog: Why Strategic Plans Fail

As you can imagine, at Browne Innovation Group we are constantly trying to improve our strategic planning process for our clients. With the fundamental shifts fundraisers are facing from 1) generational change, 2) information technology changes, and 3) rising competition for donor dollars, it is not just important that a nonprofit organization’s development group be successful in their strategic planning, it is imperative we collectively “get it right,” as in many cases the very existence of the organization is at stake.

Strategic planning is a very hot topic in today’s fast-changing world. From time to time, Forbes magazine and other business publications have articles related to strategic planning. 10 Reasons Why Strategic Plans Fail caught my eye and I thought I would share the author’s 10 reasons and add my own two key elements that are crucial for successful strategic planning.

  1. Having a plan simply for plans sake.
  2. Not understanding the environment or focusing on results.
  3. Partial commitment.
  4. Not having the right people involved.
  5. Writing the plan and putting it on the shelf.
  6. Unwillingness or inability to change.
  7. Having the wrong people in leadership positions.
  8. Ignoring marketplace reality, facts and assumptions.
  9. No accountability or follow through.
  10. Unrealistic goals or lack of focus and resources.

I’ll bet one or more of the above resonated with you; in fact, maybe all of them did. I urge you to click on the article (above) and get the author’s comments on each of the above points. . . and they are excellent points! In addition to the above list I have added my two key elements below which I have learned are absolutely critical to translating the strategic insights and planning process into actionable results. After all, results are what the whole exercise is about.

Mike’s Two Elements for Successful Strategic Planning:
  1. The strategic insight or advantage that has been identified in the strategic planning process must be incorporated into an operations plan (some call it a business plan) that includes a financial proforma. The financial proforma projects the expected financial results of implementing the strategic plan. In my experience, if the strategic plan does not contain a financial plan it is merely an exercise in futility with no accountability. It never ceases to amaze me the number of commercial and nonprofit organizations that create a strategic plan with no financial accountability. What’s the point?
  1. Almost every organization finds it advantageous to contract with a professional strategic planning facilitator to produce a strategic plan. This is enhanced if the facilitator also brings subject matter expertise to the engagement. It is also highly recommended that whomever you choose to facilitate your organization’s strategic planning process be retained at some level for at least one year into the implementation of the strategic plan. In my experience with hiring consultants over the years – especially those with subject matter expertise - if they know up front that their proverbial butt is also on the line for a successful implementation, it dramatically enhances the outcome. It also acts as a way to weed out those that only “talk the talk” but don’t “walk the walk.”


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Sunday, March 11, 2012

BIG’s Blog: Can Social Media Drive Major Gifts?

As I have mentioned in my previous blogs, although I occasionally get a response to my posts through the blog link (see the link at the end), most people still send their responses via email to me.

One topic that has popped up a number of times is the question regarding how the Internet will help planned giving and major donor work done by your organization’s Charitable Gift Officers. The gist of the question is, “I understand that the Internet is impacting direct mail, but how will it change working with major donors?”

I am really glad several of you raised this question. Obviously, the huge and looming threat (some would call it an existential threat) to your fundraising group’s ability to raise significant annual support will be the fall-off of direct mail fundraising over this decade. Yes, this decade! Two years ago, when I began to explicitly predict that direct mail fundraising would begin to decline in profitability for fundraising organizations that had large direct mail programs, my views were considered controversial. Now that people are seeing the significant contraction of the Postal Service, it is finally sinking in.

And we have been equally explicit in stating that “if your direct mail program is still profitable, leave it alone.” That statement is not a contradiction to our view that there will be a huge fall-off in the effectiveness and profitability of direct mail fundraising over the next decade, but rather shows our understanding of the internal dynamics of nonprofit fundraising organizations. Of course direct mail will decline as the number of your Depression and WWII cohorts shrink and the use of digital Internet-based communication rises, and each organization will have its own fall-off timeline based on many unique factors. But trying to shift long-tenured direct mail staff in their late 40s, 50s and 60s into online technology doesn’t work. With few exceptions . . . and there are some exceptions . . . online will always be treated as the second fiddle if you force direct mail professionals to also own online. Been there, tried that . . .  IT DOESN’T WORK!

You need to develop a new strategic plan that recognizes that the rise of the Internet is not about transitioning from the way you are doing fundraising today but ultimately transforming to a new fundraising model.  You need to build online as a separate team within fundraising. Developing a plan that leaves your direct mail alone while creating a separate online team (small to begin with) will allow your direct mail team to maximize its declining profitability while your online team grows.

But back to the major gifts and planned giving question.

Charitable Gift Officers are the equivalent of person-to-person sales people in the commercial world. Charitable Gift Officers reach out to a select group of donors that have the ability to make significant donations. They do this by staying in touch with these individuals and in-person meetings. In the past, their methods of staying in touch were limited to phone calls, mail, newsletters, and previously mentioned personal meetings.

But now we are in the Internet age and the quiver of tools has expanded. Methods of staying in touch can still include the above listed methods, but now – depending on the age and online abilities of the potential donor – email, Web links and social media play a growing role.

In the commercial sales world, the advent of sales force automation tools have allowed sales people, who previously could only manually manage upwards of 75 customers, to now easily handle 5 to 10 times that number.  

Creating a new strategy for online development of new donors to replace your direct mail methodology also will impact your planned giving and major donor team, making them more productive and effective.

When we say; “the Internet changes everything,” we are not excluding your Charitable Gift Officers.


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Wednesday, March 7, 2012

BIG’s Blog: Do You Remember Life Magazine?

When I was growing up in the 50’s and 60’s, Life magazine was my favorite next to Boys’ Life. It was bigger than the other magazines of the day and it had tons of pictures. Long before National Geographic assumed the mantle of best photography, it was Life magazine’s photo journalists who were the world’s best. For a photo journalist to be featured in Life was the crowning achievement of their career.  

Today, Life is an anachronism. You can still find them but they have no subscription base. Their layout is still photo-based and their subject matter is only of interest to people our age or older. We know the brand even though we have long since stopped buying or reading it.

Most of my blog readership are fundraisers with significant direct mail fundraising programs. These programs pre-date you. In fact, most go back to the 1940’s or even earlier. I also know you have an archive of old mail packages.

Do this for me and for yourself; pull an old direct mail package from as far back as you can find. Then compare it to your mail packages today. No doubt it will have less color and the addressing mechanism might be a label . . . but when you compare it side-by-side to your current packages, you will see that the technical elements; the headline, copy layout, story elements, even the PS are still used today. The look has changed, but not the basic format, layout, and package components.

Now just take a hard look at your current mail packages. Remember the last time you saw a copy of  Life magazine in the grocery store? That is what someone under 40 sees when they see your direct mail package today. It is an anachronism.

Of course, many of your donor mail programs still return a profitable response. But are you studying the net contribution today compared to five years ago? Your margins are shrinking, which means you have to mail up to twice as many mailing packages to generate the same net contribution dollars as five years ago. But you can’t mail twice as many.

Don’t let your fundraising group become an anachronism. The digital-based internet fundraising world is different from what you are used to. But different isn’t bad . . . it’s just different.


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Sunday, March 4, 2012

BIG’s Blog: Fundraising Marketing Versus Control

The goal of fundraising will always be the same: raise the revenue necessary to fund the work of your organization. But marketing (and that includes fundraising marketing) is fundamentally changing. By “fundamental change” I mean that marketing is done completely differently than you are practicing it today. Oh, and by the way, you also have to give up control.

In the vertical marketing world that we all grew up in, the marketer was in charge. She had the plan, the budget, and the control of where to spend her marketing dollars. Vertical marketing starts at the top and involves advertising tactics like TV and radio spots, magazine or newspaper ads, direct mail, and pushing our PR hype through the media. This is the advertising and broadcast world that is dying.

The horizontal marketing world is built on the internet. It is all about your organization creating a wonderful mission and telling your story in a compelling way so it spreads from person to person. But it’s outside your control. Your story is spread by people who become passionate about your organization and the work you do. These passionate people aren’t paid agents like the broadcasters in vertical marketing.

Horizontal marketing works because you give up control. Your organization spends its time and resources delivering a phenomenal service to the poor, the marginalized, the hurting, and so many other groups. The fundraising organization meanwhile spends their budget on one thing . . . engaging your passionate supporters and meeting their needs.

Direct mail is declining in effectiveness as millions of people go online. The online rules of marketing are different, but you have to be there if you are going to grow.


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Friday, March 2, 2012

Links are Up and Running!

Our earlier post, for some reason, had inactive links.  The links to Pinterest and the Pinterest story are now up and running!

We apologize for the inconvenience!


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Thursday, March 1, 2012

BIG’s Blog: Social is Evolving

Do you have a personal Facebook page yet?

Have you set up Facebook for your organization? How about Twitter?

This is a Step #1, and Step #2 blog.

Step 1: If you haven’t heard of Pinterest, then click here, listen to the story, and then come back for Step #2.

Step # 2: Online social interactions are evolving and expanding. This is all good news for nonprofit fundraisers. At first social was all about how many friends or groups you are joining. And of course people that connect with each other on social sites like Facebook or Twitter share some common connections or interests. Now, new online tools like Pinterest are opening up and connecting people that don’t know each other but share common interests. Now people are sharing their interests, learning from each other and now people that don’t know each other are following and connecting over a common interest, forming new kinds of “interest communities.”

Do you see how this could help you find new supporters who may be passionate about your cause but don’t know you exist? Do you see how this evolving technology connects your current supporters to new supporters? Current supporters sharing their passion for your work and new people connecting to you.

This is also syncing up with the three major trends that are transforming all organizations, both commercial and nonprofit. They are: 1) Mobile, 2) Social (our subject today) and 3) the Cloud.

This huge shift is underway and for Information Technology (IT), these three trends, plus dealing with massive amounts of data (big data), will combine to create the biggest technology shift since the Internet. And the really good news for fundraisers: the entry costs are low compared to direct mail fundraising.

Successful fundraisers will utilize these technologies to transform their fundraising.

Is it transition from direct mail-centric methods today to online technologies tomorrow? No, it’s transformation. Leave your direct mail alone if it is still working, but create your new online group separately. It’s a different world.


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